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iRhythm Technologies Announces First Quarter 2022 Financial Results

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iRhythm Technologies reported strong first-quarter results for 2022, with revenue reaching $92.4 million, a 24.3% increase year-over-year. Gross margin improved to 66.9%, despite a slight decline from last year. However, the company reported a net loss of $50.6 million, an increase from $27.8 million in Q1 2021, attributed to higher operating expenses driven by one-time charges. Looking ahead, iRhythm projects 2022 revenue between $410 million and $420 million, anticipating growth of 27% to 30% compared to 2021.

Positive
  • Revenue increased 24.3% year-over-year to $92.4 million.
  • Gross margin improved to 66.9%, reflecting operational efficiency.
  • Guidance projects 2022 revenue growth of 27% to 30%.
Negative
  • Net loss widened to $50.6 million from $27.8 million in Q1 2021.
  • Operating expenses surged to $110.3 million due to one-time charges.

SAN FRANCISCO, May 05, 2022 (GLOBE NEWSWIRE) -- iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital healthcare solutions company focused on the advancement of cardiac care, today reported financial results for the three months ended March 31, 2022.

First Quarter 2022 Financial Highlights

  • Revenue of $92.4 million, a 24.3% increase compared to first quarter 2021
  • Gross margin of 66.9%, a 4.2 percentage point improvement compared to fourth quarter 2021
  • Adjusted EBITDA* loss of $4.8 million, a $12.5 million improvement compared to fourth quarter 2021
  • Cash and short-term investments of $208.8 million at March 31, 2022, a $30.3 million decline from December 31, 2021
  • Amended debt facility with non-dilutive term loan of up to $75 million and a revolving credit facility of up to $25 million with a maturity date of March 1, 2027

*Refer to adjusted EBITDA reconciliation table below.

Recent Operational Highlights

  • Updated reimbursement rates that impact Zio XT for CPT codes 93243 and 93247 to $329 and $342, respectively, published by National Government Services (NGS), a Medicare Administrative Contractor (MAC) that serves the Suburban Chicago area and where one of our independent diagnostic testing facilities, or IDTFs, is located
  • Dr. Mintu Tarakhia appointed as Chief Medical Officer and Chief Scientific Officer to drive continued innovation, lead research and evidence generation and enhance the clinical product and service portfolio
  • Important clinical data recently presented at The American College of Cardiology's 71st Annual Scientific Session and at the 2022 Heart Rhythm Society meeting highlighting Zio XT, Zio AT and Zio Watch

"Our strong first quarter results are indicative of the momentum we carried into 2022 with an acceleration in daily registrations leading to record quarterly volumes. New account openings were up 15% quarter-over-quarter, and we realized significant growth in our core U.S. market. Evidence supporting the clinical superiority of the Zio service continued to build at the annual ACC and HRS meetings through multiple presentations that demonstrated the effectiveness of long-term continuous ECG monitoring in a variety of use cases,' said iRhythm CEO and President, Quentin Blackford.

“We are energized by the tangible progress being made on the strategies we identified for achieving sustained growth in our core U.S. market and internationally, as well as leveraging our technology platform to expand into adjacent markets. With a strong pipeline of innovation and a renewed focus on operational discipline, I am excited about the opportunity ahead. iRhythm's potential is tremendous and backed by our commitment to deliver superior value to our patients, clinicians, payers and shareholders," concluded Mr. Blackford.

First Quarter Financial Results
Revenue for the three months ended March 31, 2022 increased 24.3% to $92.4 million, from $74.3 million during the same period in 2021. The increase was primarily driven by Zio XT and AT volume growth and increases in Medicare pricing.

Gross profit for the first quarter of 2022 was $61.8 million, up 21.4% from $50.9 million during the same period in 2021, while gross margins were 66.9%, down from 68.4% during the same period in 2021. The decrease in gross margin was primarily due to higher costs related to expanding capacity.

Operating expenses for the first quarter of 2022 were $110.3 million, compared to $78.3 million for the same period in 2021 and $83.5 million in Q4 2021. The sequential increase in operating expenses was due to one-time impairment and restructuring charges totaling $26.6 million associated primarily with a reduction in size of our San Francisco facility as well as severance and other employee exit related costs.

Net loss for the first quarter of 2022 was $50.6 million, or a loss of $1.71 per share, compared with net loss of $27.8 million, or a loss of $0.95 per share, for the same period in 2021.

Cash, cash equivalents, short-term investments and long-term investments were $208.8 million as of March 31, 2022.

Guidance
iRhythm projects revenue for the full year 2022 to range from $410 million to $420 million, which represents 27% to 30% growth over prior year results. Gross margin for the full year 2022 is expected to range from 68% to 69% and adjusted operating expenses are expected to range between $375 and $385 million. Adjusted EBITDA for the full year 2022 is expected to range from negative $15 million to negative $25 million.

Webcast and Conference Call Information
iRhythm’s management team will host a conference call today beginning at 1:30 p.m. PT/4:30 p.m. ET. Investors interested in listening to the conference call may do so by accessing the live and archived webcast of the event, which will be available on the “Investors” section of the company’s website at: www.irhythmtech.com.

About iRhythm Technologies, Inc.
iRhythm is a leading digital health care company redefining the way cardiac arrhythmias are clinically diagnosed. The company combines wearable biosensor devices worn for up to 14 days and cloud-based data analytics with powerful proprietary algorithms that distill data from millions of heartbeats into clinically actionable information. The company believes improvements in arrhythmia detection and characterization have the potential to change clinical management of patients.

Use of Non-GAAP Financial Measures and Other Operating Metrics
We refer to certain financial measures that are not recognized under U.S. generally accepted accounting principles (GAAP) in this press release, including adjusted EBITDA, adjusted operating expenses and adjusted net loss. See the schedules attached to this press release for additional information and reconciliations of such non-GAAP financial measures.

Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These statements include statements regarding financial guidance, market opportunity, ability to penetrate the market, anticipated productivity improvements and expectations for growth. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include risks described in the section entitled “Risk Factors” and elsewhere in our filing made with the Securities and Exchange Commission, including those on the Form 10-Q expected to be filed on or about May 6, 2022. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. iRhythm disclaims any obligation to update these forward-looking statements.

Investor Relations Contact: Media Contact:
Leigh Salvo Morgan Mathis
(415) 937-5404 (310) 528-6306
investors@irhythmtech.com irhythm@highwirepr.com

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

 March 31,
  2022   2021 
Assets   
Current assets:   
Cash and cash equivalents$94,786  $127,562 
Short-term investments 113,998   111,569 
Accounts receivable, net 55,286   46,430 
Inventory 12,446   10,268 
Prepaid expenses and other current assets 9,838   9,693 
Total current assets 286,354   305,522 
Property and equipment, net 57,135   55,944 
Operating lease right-of-use assets 65,256   84,587 
Goodwill 862   862 
Other assets 19,110   16,052 
Total assets$428,717  $462,967 
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$5,413  $10,509 
Accrued liabilities 41,935   51,486 
Deferred revenue 2,933   3,049 
Debt, current portion    11,667 
Operating lease liabilities, current portion 11,501   11,142 
Total current liabilities 61,782   87,853 
Debt, noncurrent portion 34,917   9,690 
Other noncurrent liabilities 832   697 
Operating lease liabilities, noncurrent portion 86,344   85,212 
Total liabilities 183,875   183,452 
Stockholders’ equity:   
Preferred Stock     
Common stock 27   27 
Additional paid-in capital 701,822   685,594 
Accumulated other comprehensive loss (353)  (61)
Accumulated deficit (456,654)  (406,045)
Total stockholders’ equity 244,842   279,515 
Total liabilities and stockholders’ equity$428,717  $462,967 
    

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)

 Three months ended
March 31,
  2022   2021 
Revenue, net$92,378  $74,311 
Cost of revenue 30,619   23,458 
Gross profit 61,759   50,853 
Operating expenses:   
Research and development 10,542   8,510 
Selling, general and administrative 73,158   69,813 
Impairment and Restructuring 26,608    
Total operating expenses 110,308   78,323 
Loss from operations (48,549)  (27,470)
Interest expense (2,029)  (335)
Other income, net 16   124 
Loss before income taxes (50,562)  (27,681)
Income tax provision 47   98 
Net loss$(50,609) $(27,779)
Net loss per common share, basic and diluted$(1.71) $(0.95)
Weighted-average shares, basic and diluted 29,596,325   29,164,430 

IRHYTHM TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(Unaudited)
(In thousands)

 Three months ended
March 31,
Adjusted EBITDA reconciliation 2022   2021 
Net loss$(50,609) $(27,779)
Income tax provision 47   98 
Depreciation and Amortization 3,143   2,036 
Interest expense 1,897   247 
Stock-based compensation 13,903   20,230 
Impairment and restructuring charges 26,866    
Adjusted EBITDA$(4,753) $(5,168)


 Three months ended, March 31,
Non-GAAP restructuring and impairment reconciliation 2022 
Impairment and restructuring charges, as reported$26,608 
Restructuring related consulting fees 258 
Non-GAAP restructuring and impairment$26,866 
  
Adjusted net loss reconciliation 
Net loss, as reported$(50,609)
Impairment and restructuring charges, as reported 26,608 
Restructuring related consulting fees 258 
Adjusted net loss$(23,743)
  
Adjusted net loss per share reconciliation 
Net loss per share, as reported$(1.71)
Impairment and restructuring charges, as reported 0.90 
Restructuring related consulting fees 0.01 
Adjusted net loss per share$(0.80)
  
Adjusted operating expense reconciliation 
Operating expense, as reported$110,308 
Impairment and restructuring charges 26,608 
Adjusted operating expense$83,700 

 


FAQ

What were iRhythm's first quarter 2022 financial results?

iRhythm reported revenue of $92.4 million, a 24.3% year-over-year increase, with a net loss of $50.6 million.

What is the revenue guidance for iRhythm in 2022?

iRhythm projects 2022 revenue to be between $410 million and $420 million, indicating a growth of 27% to 30%.

How did iRhythm's gross margin perform in Q1 2022?

The gross margin for Q1 2022 was 66.9%, showing an improvement compared to previous quarters.

What factors contributed to iRhythm's increased operating expenses?

The increase in operating expenses was primarily due to one-time impairment and restructuring charges totaling $26.6 million.

What were the net loss figures for iRhythm in Q1 2022?

iRhythm reported a net loss of $50.6 million, or $1.71 per share, compared to a net loss of $27.8 million in Q1 2021.

iRhythm Technologies, Inc

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